OREANDA-NEWS. May 03, 2011. The growth of administrative prices as a result of adoption of the new tariffs for gas and central heating played a significant role in formation of the annual inflation rate in March, according to the National Bank of Moldova. Food prices which increased as a result of the rise in prices for foodstuffs in the international market and the increase in transport costs due to the growth of prices for fuel also had a considerable influence on the inflation rate.

The annual basic inflation in March was 2.8%, which is much lower than the consumer price index rate. This fact confirms a big impact of non-monetary factors on the inflation process in Moldova. The NBM says that inflation in the next months will be determined, particularly, by preservation of the inflationary pressure from supply, mostly caused by the growth of regulated prices and rise in prices for oil in the global market, which are out of the bank’s control. In its turn, the growth of prices in the global oil market will reflect the home prices by the increase in prices for imported energy resources, and, indirectly, by the increase in the production costs.

In addition, there is still a risk that prices for imported production will be growing as a result of devaluation of the USD against euro, the share of which in the consumer price index basket is considerable. According to the NBM, given the fact that the real GDP is approaching its potential level, the deviation of the GDP will remain neural during the whole projected period, thus, reducing the possibility of appearance of considerable inflationary pressure from demand. The NBM’s expectations point out the acceleration of inflation in the III and IV quarters of 2011 with the return to the target indicators by end-2012.

The NBM emphasizes that the balance of risks concerning the projection for 2011 is relatively balanced. For 2012, the risks remain high and come, in particular, from the budgetary-tax policy which may reflect prices by encouraging total demand or indirectly through indirect taxes.